Tag Archives: Poor

Shocking amount of wealth and power held by 0.001% of the world population. Oxfam reported that the fortunes made by the world’s 100 richest people over the course of 2012- roughly $240 billion – would be enough to lift the world’d people out of poverty four times over!

Conservative Republicans in our nation’s capital have managed to accomplish something they only dreamed of when Tea Partiers streamed into Congress at the start of 2011: They’ve basically shut Congress down. Their refusal to compromise is working just as they hoped: No jobs agenda. No budget. No grand bargain on the deficit. No background checks on guns. Nothing on climate change. No tax reform. No hike in the minimum wage. Nothing so far on immigration reform.

It’s as if an entire branch of the federal government — the branch that’s supposed to deal directly with the nation’s problems, not just execute the law or interpret the law but make the law — has gone out of business, leaving behind only a so-called “sequester” that’s cutting deeper and deeper into education, infrastructure, programs for the nation’s poor, and national defense.

The window of opportunity for the President to get anything done is closing rapidly. Even in less partisan times, new initiatives rarely occur after the first year of a second term, when a president inexorably slides toward lame duck status.

But the nation’s work doesn’t stop even if Washington does. By default, more and more of it is shifting to the states, which are far less gridlocked than Washington. Last November’s elections resulted in one-party control of both the legislatures and governor’s offices in all but 13 states — the most single-party dominance in decades.

This means many blue states are moving further left, while red states are heading rightward. In effect, America is splitting apart without going through all the trouble of a civil war.

Minnesota’s Democratic-Farmer-Labor Party, for example, now controls both legislative chambers and the governor’s office for the first time in more than two decades. The legislative session that ended a few weeks ago resulted in a hike in the top income tax rate to 9.85%, an increased cigarette tax, and the elimination of several corporate tax loopholes. The added revenues will be used to expand early-childhood education, freeze tuitions at state universities, fund jobs and economic development, and reduce the state budget deficit. Along the way, Minnesota also legalized same-sex marriage and expanded the power of trade unions to organize.

California and Maryland passed similar tax hikes on top earners last year. The governor of Colorado has just signed legislation boosting taxes by $925 million for early-childhood education and K-12 (the tax hike will go into effect only if residents agree, in a vote is likely in November).

On the other hand, the biggest controversy in Kansas is between Governor Sam Brownback, who wants to shift taxes away from the wealthy and onto the middle class and poor by repealing the state’s income tax and substituting an increase in the sales tax, and Kansas legislators who want to cut the sales tax as well, thereby reducing the state’s already paltry spending for basic services. Kansas recently cut its budget for higher education by almost 5 percent.

Other rightward-moving states are heading in the same direction. North Carolina millionaires are on the verge of saving $12,500 a year, on average, from a pending income-tax cut even as sales taxes are raised on the electricity and services that lower-income depend residents depend on. Missouri’s transportation budget is half what it was five years ago, but lawmakers refuse to raise taxes to pay for improvements.

The states are splitting as dramatically on social issues. Gay marriages are now recognized in twelve states and the District of Columbia. Colorado and Washington state permit the sale of marijuana, even for non-medical uses. California is expanding a pilot program to allow nurse practitioners to perform abortions.

Meanwhile, other states are enacting laws restricting access to abortions so tightly as to arguably violate the Supreme Court’s 1973 decision in Roe v. Wade. In Alabama, the mandated waiting period for an abortion is longer than it is for buying a gun.

Speaking of which, gun laws are moving in opposite directions as well. Connecticut, California, and New York are making it harder to buy guns. Yet if you want to use a gun to kill someone who’s, say, spray-painting a highway underpass at night, you might want to go to Texas, where it’s legal to shoot someone who’s committing a “public nuisance” under the cover of dark. Or you might want to live in Kansas, which recently enacted a law allowing anyone to carry a concealed firearm onto a college campus.

The states are diverging sharply on almost every issue you can imagine. If you’re an undocumented young person, you’re eligible for in-state tuition at public universities in fourteen states (including Texas). But you might want to avoid driving in Arizona, where state police are allowed to investigate the immigration status of anyone they suspect is here illegally. And if you’re poor and lack health insurance you might want to avoid a state like Wisconsin that’s refusing to expand Medicaid under the Affordable Care Act, even though the federal government will be picking up almost the entire tab.

Federalism is as old as the Republic, but not since the real Civil War have we witnessed such a clear divide between the states on central issues affecting Americans.

Some might say this is a good thing. It allows more of us to live under governments and laws we approve of. And it permits experimentation: Better to learn that a policy doesn’t work at the state level, where it’s affected only a fraction of the population, than after it’s harmed the entire nation. As the jurist Louis Brandies once said, our states are “laboratories of democracy.”

But the trend raises three troubling issues.

First, it leads to a race to bottom. Over time, middle-class citizens of states with more generous safety nets and higher taxes on the wealthy will become disproportionately burdened as the wealthy move out and the poor move in, forcing such states to reverse course. If the idea of “one nation” means anything, it stands for us widely sharing the burdens and responsibilities of citizenship.

Second, it doesn’t take account of spillovers — positive as well as negative. Semi-automatic pistols purchased without background checks in one state can easily find their way easily to another state where gun purchases are restricted. By the same token, a young person who receives an excellent public education courtesy of the citizens of one state is likely to move to another state where job opportunity are better. We are interdependent. No single state can easily contain or limit the benefits or problems it creates for other states.

Finally, it can reduce the power of minorities. For more than a century “states rights” has been a euphemism for the efforts of some whites to repress or deny the votes of black Americans. Now that minorities are gaining substantial political strength nationally, devolution of government to the states could play into the hands of modern-day white supremacists.

A great nation requires a great, or at least functional, national government. The Tea Partiers and other government-haters who have caused Washington to all but close because they refuse to compromise are threatening all that we aspire to be together.

This is no time to be complacent. Massive economic problems are erupting all over the globe, but most people seem to believe that everything is going to be just fine. In fact, a whole bunch of recent polls and surveys show that the American people are starting to feel much better about how the U.S. economy is performing. Unfortunately, the false prosperity that we are currently enjoying is not going to last much longer. Just look at what is happening in Europe. The eurozone is now in the midst of the longest recession that it has ever experienced. Just look at what is happening over in Asia. Economic growth in India is the lowest that it has been in a decade and the Japanese financial system is beginning to spin wildly out of control. One of the only places on the entire planet where serious economic problems have not already erupted is in the United States, and that is only because we have “kicked the can down the road” by recklessly printing money and by borrowing money at an unprecedented rate. Unfortunately, the “sugar high” produced by those foolish measures is starting to wear off. We are going to experience a massive amount of economic pain along with the rest of the world – it is just a matter of time.

But for the moment, there are a lot of skeptics out there.

For the moment, there are a lot of people that are declaring that the problems of the past have been fixed and that we are heading for incredibly bright economic times ahead.

Unfortunately, those people appear to be purposely ignoring the economic horror that is breaking out all over the globe.

The following are 18 signs that massive economic problems are erupting all over the planet…

#1 The eurozone is now in the midst of its longest recession ever. Economic activity in the eurozone has declined for six quarters in a row.

“I’ve sent CVs everywhere, I come to the unemployment agency every day, for 3 or 4 hours to look for work as a truck driver and there’s never anything,” said 42-year old Djamel Sami, who has been unemployed for a year, leaving a job agency in Paris.

#7 Unemployment in the eurozone as a whole has just hit a brand new all-time record high of 12.2 percent.

#12 Suddenly Australia is experiencing some tremendous economic challenges. The following quotes are from a recent Zero Hedge article…

-“We’re seeing a much sharper contraction in the Australian economy than we’d anticipated four or five months ago”. Coffey MD, John Douglas. The engineering group has seen its shares, which traded above $4 in 2007, hit 10c last week.

-“By 10am, the Fitness First gym in the city is packed full of brokers who’ve had a gutful of sitting at their desk doing nothing – salary cuts are starting and next it will be jobs” Perth broker

-“Oh mate, the funding market is dead. You are now seeing a few deeply discounted rights issues for those that are reaching desperate levels ….. liquidity has completely disappeared” Perth broker

#13 The financial system in Japan is beginning to spin wildly out of control. The Japanese stock market has now declined about 15 percent from the peak, and many believe that the yen will continue to get weaker and that interest rates in Japan will start to rise significantly.

#14 Global cash flow is declining at a rate not seen since the last recession. This indicates that we could be headed for a global credit crunch.

#15 Real wages continue to decline in the United States. Even though we are being told that the U.S. is experiencing an “economy recovery”, real weekly earnings have declined from $297.79 in 2010 to $295.49 in 2011 to $294.83 in 2012. (The preceding calculation is based on 1982-1984 dollars)

#16 Wall Street is buzzing about the fact that “the Hindenburg Omen” appeared at the end of last week. So exactly what is “the Hindenburg Omen”? The following are the criteria that are used to determine whether it has appeared or not…

1. The daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.

2. The smaller of these numbers is greater than or equal to 69 (68.772 is 2.2% of 3126). This is not a rule but more like a checksum. This condition is a function of the 2.2% of the total issues.

3. That the NYSE 10 Week moving average is rising.

4. That the McClellan Oscillator ( a market breadth indicator used to evaluate the rate of money entering or leaving the market and interpretively indicate overbought or oversold conditions of the market) is negative on that same day.

5. That new 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows to be more than double new 52 Week Highs).

When the Hindenburg Omen makes an appearance, it supposedly means that the U.S. stock market is likely to experience a serious decline within the next 40 days.

#17 As I wrote about the other day, the SentimenTrader Smart/Dumb Money Index is now the lowest that it has been in more than two years. That means that lots of “smart money” has been getting out of the market and lots of “dumb money” has been pouring in.

#18 Margin debt on the New York Stock Exchange has set a new all-time high. The following is from a recent Market Oracle article…

Margin debt—that’s the amount of money borrowed to purchase stocks—on the New York Stock Exchange (NYSE) reached its all-time high in April. Margin debt on the NYSE registered at $384.3 billion as the key stock indices hit new record-highs. (Source: New York Stock Exchange web site, last accessed May 29, 2013.) The highest margin debt ever reached prior to this was in July of 2007, when it stood just above $381.0 billion. At that time, just like today, the key stock indices were near their peaks and “buy now before it’s too late” was the prominent theme of the day

Wall Street has had a good couple of years, but it has been a “false prosperity” that has been pumped up by reckless money printing by the Federal Reserve. Just like all of the other stock market bubbles that we have seen in recent years, this one is going to burst too. And as Marc Faber recently pointed out, this bubble has been particularly beneficial to the wealthy…

The Fed has been flooding the system with money. The problem is the money doesn’t flow into the system evenly. It doesn’t increase economic activity and asset prices in concert. Instead, it creates dangerous excesses in countries and asset classes. Money-printing fueled the colossal stock-market bubble of 1999-2000, when the Nasdaq more than doubled, becoming disconnected from economic reality. It fueled the housing bubble, which burst in 2008, and the commodities bubble. Now money is flowing into the high-end asset market – things like stocks, bonds, art, wine, jewelry, and luxury real estate.

Money-printing boosts the economy of the people closest to the money flow. But it doesn’t help the worker in Detroit, or the vast majority of the middle class. It leads to a widening wealth gap. The majority loses, and the minority wins.

The fact that the U.S. stock market has set new all-time record high after new all-time record high in recent months means very little. At this point, the stock market has become completely divorced from economic reality. When this current bubble bursts, the adjustment is going to be very painful. Wall Street will likely whine and complain and ask for more bailouts, but they may find that authorities are not nearly as sympathetic this time.

Much of the rest of the world is already experiencing the next major wave of the economic collapse. Reckless money printing by the Fed and reckless borrowing and spending by the federal government may have delayed the inevitable in the United States for a little while, but those measures have also made our long-term problems even worse.

There was one piece of advice that Ben Bernanke included in his commencement speech to students at Princeton recently that I thought was particularly ironic…

“Don’t be afraid to let the drama play out.”

Will he take his own advice when the next great financial crisis strikes the United States?

That seems very unlikely.

Unfortunately, things are not going to be so easy to fix this next time.

According to a study that was just released by Boston Consulting Group, the wealthiest one percent now own 39 percent of all the wealth in the world. Meanwhile, the bottom 50 percent only own 1 percent of all the wealth in the world combined. The global financial system has been designed to funnel wealth to the very top, and the gap between the wealthy and the poor continues to expand at a frightening pace. The global elite continue to hoard wealth and heap together enormous mountains of treasure in these troubled days even though the economic suffering around the planet continues to grow. So exactly how have the global elite accumulated so much wealth? Well, one of the primary ways is through the use of debt. There is about 190 trillion dollars of debt in the world but global GDP is only about 70 trillion dollars. Our debt-based global financial system systematically transfers wealth from us and our governments into the hands of the global elite. And, of course, the gigantic banks and corporations that the elite control are constantly gobbling up everything of value that they can find: natural resources, profitable small businesses, real estate, politicians, etc. Money, power, ownership and control are becoming very, very tightly concentrated at the top of the food chain, and that is a very dangerous thing for humanity. When too much money and power gets into too few hands, it almost always results in tyranny.

What will eventually happen when the global elite have ALL the wealth?

Will the rest of us work as serfs in a system that they have iron-fisted control over?

And what if they decide that they don’t really need billions of people working for them? Will they decide to implement population control measures in order to reduce the number of “useless eaters”? It is already happening in China and other highly centralized societies.

When all of the economic rewards of a society go to a very small handful of people, it tends to be very destabilizing. We have seen this again and again throughout history.

When people have everything taken away from them and they have nothing left to lose, they tend to become very desperate. And right now we are rapidly hurtling toward a time of great global instability. Anger and frustration are growing all over the globe, and the rate at which the gap between the wealthy and the poor is widening seems to be accelerating. Just check out these numbers…

-The wealthiest 1 percent of the global population now owns 39 percent of all the wealth on the planet.

-According to a report that was released last summer, the global elite have up to 32 TRILLION dollars stashed in offshore banks around the planet.

-According to a study conducted by Credit Suisse, the bottom two-thirds of the global population owns just 3.3% of all the wealth.

In the world that we live in, money equals power. And the more money that the top one percent accumulate, the more power they will accumulate as well.

So exactly who are the top one percent? The global elite are absolutely obsessed with power and control and they have been working to implement their agenda for a very long time. In the end, they hope to unite the entire planet under a monolithic global system that they control. They are actually quite open about this – it is just that most people do not want to believe it.

But of course not everyone is doing badly in the U.S. right now. In fact, those that own stocks have had lots of reasons to celebrate in recent months.

So who owns stocks?

Well, the wealthy do of course. In fact, approximately 60 percent of all individually held stocks are owned by the top 5 percent of all Americans.

During the last recession, Americans lost 16 trillion dollars of wealth. Since then, about 45 percent of that wealth has been “recovered”, but the vast majority of that “recovery” has been due to rising stock prices. The following comes from a recent Washington Post article…

From the peak of the boom to the bottom of the bust, households watched a total of $16 trillion in wealth disappear amid sinking stock prices and the rubble of the real estate market. Since then, Americans have only been able to recapture 45 percent of that amount on average, after adjusting for inflation and population growth, according to the report from the St. Louis Fed released Thursday.

In addition, the report showed most of the improvement was due to gains in the stock market, which primarily benefit wealthy families. That means the recovery for other households has been even weaker.

“A conclusion that the financial damage of the crisis and recession largely has been repaired is not justified,” the report stated.

Once upon a time, the United States had the largest and most thriving middle class in the history of the world. That was a great thing. But now the middle class is being destroyed and government dependence has surged to an all-time high.

The following are some of the incredible statistics that show how wide the gap between the wealthy and the poor in America is becoming…

-The wealthiest 1 percent of all Americans now own more than a third of all the wealth in the United States.

The Census Bureau has reported that one out of six Americans lives in poverty. A shocking figure. But it’s actually much, much worse.

The Census Bureau has reported that 15% of Americans live in poverty. A shocking figure. But it’s actually much worse. Inequality is spreading like a shadowy disease through our country, infecting more and more households, and leaving a shrinking number of financially secure families to maintain the charade of prosperity.

Since the recession, the disparities have continued to grow. An OECD report states that “inequality has increased by more over the past three years to the end of 2010 than in the previous twelve,” with the U.S. experiencing one of the widest gaps among OECD countries. The 30-year decline in wages has worsened since the recession, as low-wage jobs have replaced formerly secure middle-income positions.

3. Based on wage figures, half of Americans are in or near poverty.

The IRS reports that the highest wage in the bottom half of earners is about $34,000. To be eligible for food assistance, a family can earn up to 130% of the federal poverty line, or about $30,000 for a family of four.

Even the Census Bureau recognizes that its own figures under-represent the number of people in poverty. Its Supplemental Poverty Measure increases, by 50%, the number of Americans who earn between one-half and two times the poverty threshold.

4. Based on household expense totals, poverty is creeping into the top half of America.

Nothing, that is, except debt. The median debt level rose to $75,600 in 2009, while the median family net worth, according to the Federal Reserve, dropped from $126,400 in 2007 to $77,300 in 2010.

5. Putting it in Perspective

Inequality is at its ugliest for the hungriest people. While food support was being targeted for cuts, just 20 rich Americans made as much from their 2012 investments as the entire 2012 SNAP (food assistance) budget, which serves 47 million people.

And as Congress continues to cut life-sustaining programs, its members should note that their 400 friends on the Forbes list made more from their stock market gains last year than the total amount of the food, housing, and education budgets combined.

Lost in the shuffle of last year’s big fiscal cliff deal was the deal that didn’t happen on a new farm bill.

One of the major points of contention was funding for food stamps through the Supplemental Nutritional Assistance Program, run by the US Department of Agriculture. Republicans in the House proposed steep cuts: $16.5 billion over the next decade, which would eliminate food assistance to as many as 3 million low-income Americans. The Senate countered with a farm bill cutting $4.5 billion from SNAP over the same time period.

There was simply no deal to be had on the farm bill, and so Congress passed a simple extension until September 30. Now Congress has to start over—all prior versions of the farm are dead, since there’s a new Congress.

And this time around Republicans are only going to increase, not moderate, their demands for steep food stamp cuts. Representative Frank Lucas, the chair of the House Agriculture Committee, told the Capital Press this weekend that the new House farm bill will mandate $20 billion in SNAP cuts over the next ten years.

“From the end of the recession in 2009 through 2011 (the last year for which Census Bureauwealth data are available), the 8 million households in the U.S. with a net worth above $836,033 saw their aggregate wealth rise by an estimated $5.6 trillion, while the 111 million households with a net worth at or below that level saw their aggregate wealth decline by an estimated $600 billion.” Pew Research, “An Uneven Recovery, by Richard Fry and Paul Taylor.

Since the recession was officially declared to be over in June 2009, I have assured readers that there has been no recovery. Gerald Celente, John Williams (shadowstats.com), and no doubt others have also made it clear that the alleged recovery is an artifact of an understated inflation rate that produces an image of real economic growth.

The Pew report attributes the recovery for the affluent to the rise in the stock and bond markets, but does not say what caused these markets to rise.

The stock market’s recovery does not reflect rising consumer purchasing power and retail sales. The labor force is shrinking, not growing. Job growth lags population growth, and the few jobs that are created are primarily dead-end jobs in lowly paid domestic services. Retail sales adjusted for inflation and real median household income have been bottom bouncing since 2009.

To the extent that there is profit growth in US corporations, it comes from labor cost savings from offshoring US jobs and from bringing in foreign workers on work visas. By lowering labor costs, corporations boost profits and thereby capital gains for those 7 percent who have large holdings of financial assets. Those in the 93 percent who are displaced by foreign workers experience income reductions. This transfer of the incomes of the 93 percent to the 7 percent via jobs offshoring and work visas is the reason for the stark rise in US income inequality.

Another source of the stock market’s rise is the Federal Reserve’s policy of quantitative easing, that is, the printing of $1,000 billion dollars annually with which to support the too-big-to-fail banks’ balance sheets and to finance the federal budget deficit. The cash that the Fed is pouring into the banks is not finding its way into business and consumer loans, but the money is available for the banks to speculate in derivatives and stock market futures. Thus, the Fed’s policy, which is directed at keeping afloat a few oversized banks, also benefits the 7 percent by driving up the value of their stock portfolios.

The reason bond prices are so high that real interest rates are negative is that the Fed is purchasing $1,000 billion of mortgage-backed “securities” and US Treasury debt annually. The lower the Fed forces interest rates, the higher go bond prices. If you are among the 7 percent, the Fed has produced capital gains for your bond portfolio. But if you are a saver among the 93 percent, you are losing purchasing power because the interest you receive is less than the rate of inflation.

The Pew report puts it this way: Since the “recovery” that began in June 2009, wealthy households experienced a 28 percent rise in their net worth, while everyone else lost 4 percent of their assets.

Is this the profile of a democracy in which government serves the public interest, or is it the profile of a financial aristocracy that uses government to grind the population under foot?

If there’s any way capitalism can work, it has to be regulated. Otherwise greed takes over.

Too many Americans are unaware of the extreme disparities that have been caused by the unregulated profit incentive of capitalism. Our winner-take-all system is flailing away at once-healthy parts of society, leaving them like withered limbs on a trembling body, even as the relative few who benefit promote the illusion of opportunity and prosperity for all. Concerned citizens armed with facts are not fooled. Instead, the more they learn the angrier they get. And as in revolutions of the past, discontent leads to change.

Hacking Off the Poor Half of Society

Some wealthy and uninformed individuals have referred to the lowest-income 47% of Americans as the “takers,” who enjoy government benefits at the expense of the high-earning one percent. But their claim is meaningless. The total amount paid out in ‘welfare’ (Temporary Assistance for Needy Families) is less than the investment income of just three men in a single year.

The monthly TANF income for a family of four is less than what the average member of the Forbes Top 20 made in one second at the office.

The 47% don’t own stocks. They don’t own anything. The so-called ‘takers’ have ZERO wealth. The value of any assets owned by nearly half of the country is surpassed by their debt.

Slashing the Security of the Elderly

Recipients of ‘entitlements’ are accused by the uninformed of getting something for nothing. The opposite is true. According to the Urban Institute, the typical two-earner couple making average wages throughout their lifetimes will receive less in Social Security benefits than they paid in. Same for single males. Almost the same for single females.

Getting something for nothing? Yes, the rich are. Tax expenditures, which are deductions and exemptions that primarily benefit the highest-earning individuals, cost about 8% of the GDP, the same percentage that goes to Social Security and Medicare.

· Bank of America and Lehman Brothershid billions of dollars of bonuses and loans from investors.

Severing the Head from the Global Body

If you could gather together the world’s 200 richest individuals, ask each one his or her net worth, get the actual numbers from Forbes, and then add it all up, the total would be more than the total wealth of half the population of the world, 3.5 billion people.

The U.S. is one of the greatest contributors to this shameful disparity. It’s no coincidence that we’re both the third least taxed developed country and the fourth highest in wealth inequality among all nations. It’s also no surprise, with so little revenue going to the general public, that our country is the fourth worst in the overall well-being of its children.

Castrating the Taxman

Corporations have doubled their profits and cut their taxes in half in ten years. The burden of taxes, which Oliver Wendell Holmes called the price of a “civilized society,” has been shifted to workers. For every dollar of employee payroll tax paid in the 1950s corporations paid three dollars. Now it’s 22 cents.

Globalization has allowed U.S. corporations to stop paying for national defense and infrastructure and all the benefits of the U.S. legal and educational systems. All of the following companies had sizable U.S. revenues, but they claimed losses here while declaring billions of dollars of profits overseas.

· Bank of America, with 82% of its revenue in the U.S., declared $7 billion in U.S. losses and $10 billion in foreign profits.

· Citigroup, with 42% of its revenue in North America (almost all U.S.), declared a $5 billion U.S. loss and a $28 billion foreign profit.

· Pfizer, with 40% of its revenues in the U.S., declared almost $7 billion in U.S. losses to go along with $31 billion in foreign profits.

· Abbott Labs, with 42% of its sales in the U.S., declared a $256 million U.S. loss and $12 billion in foreign profits.

· Dow Chemical, with 32% of its sales in the U.S., declared a $15 million U.S. loss against foreign profits of over $5 billion.

Conclusions

If there’s any way capitalism can work, it has to be regulated. Otherwise greed takes over. Blind greed. The sneering head at the top of the body watches limbs being chopped off, but it doesn’t seem to recognize that we’re all bleeding to death.